food

Food prices to spike in 2012 due to mass droughts

Sunday, August 05, 2012 by: David Gutierrez, staff writer
Tags: food prices, drought, crop yields

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(NaturalNews) Long after one of the hottest and driest North American summers on record has turned to fall, consumers will still be feeling its effects in the form of higher food prices, possibly worldwide.

The current year has been the hottest ever yet recorded in the United States, according to data collected by the National Oceanic and Atmospheric Administration from as far back as 1895. Combined with a prolonged drought, this heat has dealt a major blow to harvests of corn, soybeans and other major cash crops that form the basis of the modern U.S. food system.

According to government figures, 88 percent of corn crops have been hit by the severe weather, turning what was originally forecast to be the largest corn harvest in history into the smallest since 2003. The estimated corn harvest fell from 166 bushels per acre in June to 146 in July, while the estimated soy harvest fell from 43.9 bushels per acre to 40 over the same time period.

Because corn and soy are staples of processed food, animal feed and exports, the low harvests are expected to lead to a direct rise in prices of a wide variety of foods, including meat and dairy products. The U.S. Department of Agriculture is predicting that beef prices will rise between four and five percent over the next year, matched by rises of 3.5 to 4.5 percent for dairy products, three to four percent for eggs and 2.5 to 3.5 percent for pork.

The crisis has given new urgency to ongoing debates over the pending Farm Bill in Congress, which includes a number of subsidies that U.S. farmers have come to rely on, especially given the expiration of a number of disaster relief programs in 2011.

Wide-ranging effects

Analysts predict that for now, the effect on the average U.S. consumer's wallet will be slight, in large part because falling gas prices will help keep food costs from rising too dramatically (transportation costs are a major part of the final price tag of food purchased from grocery stores and restaurants). Since the average U.S. household spends only about 13 percent of its budget on food, even a five percent increase in cost will be manageable in most cases. That would not be the case; however, for those already unable to afford regular healthy meals.

"It is one extra kick in the stomach" for low-income families, said economist Chris G. Christopher of the consulting firm IHS. "There's a lot of people in this country living paycheck to paycheck. This is not a good thing for them."

Furthermore, because the United States exports large quantities of basic foods such as grains and beans, a drop in U.S. production can have serious consequences for people around the world.

"We're seeing the price of wheat, corn and beans go up," said Marc Sadler, the head of the agricultural risk management team at the World Bank. "Food wheat is about bread and cookies and instant noodles. But it's about instant noodles in Asia and Indonesia, as much as it is about what you're going to buy in Wal-Mart."

According to economist Maximo Torero of the International Food Policy Research Institute, increases in the cost of animal feed are likely to be even more significant, with the effects felt most strongly in countries that import the most corn and soy-based feed.

Analysts also worry that rising food prices may ultimately have serious global consequences. Indeed, the current increases in food prices are part of a long-term trend that has already had serious political consequences. In 2008, record high food prices led to food riots in at least 25 separate countries.

Sources for this article include:

http://www.nytimes.com
http://www.naturalnews.com/031408_food_prices_inflation.html
http://www.naturalnews.com/024372_rice_prices_food.html

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